Strategic Planning for Shared Services

The question of continued value contribution is a constant one for shared services organizations (SSOs) that have come through the ‘build and implement’ stage. With today’s SSO leaders having a more significant business background and being accustomed to developing and utilizing a strategic plan, we can expect to witness more strategic planning for SSOs. 

Over the past few years, corporations with existing SSOs have been challenged to develop a strategic plan that supports the needs of the SSO and their companies. One driver for these plans is a result of these companies moving from the build and implementation stage and now asking, "what's next?" This question of continued value contribution comes internally from within the SSO and externally from the customers and sponsors. Additionally, the SSO leaders of today have a more significant business background and are accustomed to developing and utilizing a strategic plan. As we assist in planning and facilitating these sessions, it certainly sends a message that SSOs are in place long-term!

Strategic Planning as a Process

Unfortunately, most of us have participated in a strategic planning session that resulted in the plan sitting on the shelf, only to be revisited at next year's session.

A positive trend, however, is the desire by most SSO leaders for a meaningful, useful and flexible document from which to work. It is our experience that the value question for SSOs never seems to go away. The SSO squanders time either defending its position to business units and executive management or being asked to contribute more in terms of quality and cost reduction. The better-performing SSOs understand this continued challenge and have responded by leveraging the strategic plan to define its value, document its case and clearly communicate to its stakeholders. Let's take a minute and review a simple approach to strategic planning.

The first step in the process is to conduct an external scan of the SSO's environment in order to develop planning assumptions. Typically included in the scan are customers, employees, competitors, the company and its industry and corporate expectations. The idea is to brainstorm and subsequently verify the current and future expectation of these constituents. By asking a few simple questions about each stakeholder, you begin to develop an understanding of the potential issues facing the future of the SSO.

Subsequent to developing planning assumptions, you define the key components of the strategic plan, including the mission (why we exist), the vision (where we are headed in the next two to five years), the value proposition (how we add value to the company), the critical success factors (what we need to be successful), the key performance indicators (how we are to be measured against our vision and value proposition), the goals (specifically, what we are going to achieve), and finally, the strategic initiatives (what three to five major actions we are going to take to achieve our goals).

The strategic planning process described above is but one simple means to deliberately focus the SSO on a forward path. This is critical to success. We believe it is imperative for the SSO to be focused and take control of its destiny.

Common Themes Coming From the Strategy Sessions

When we reflect upon the strategy work we've managed in recent years, there are a couple of basic themes that emerge for operating successful SSOs. They are:

  • importance of a strategic plan
  • balance of cost and quality
  • expansion capability

Importance of a Strategic Plan

Our clients have expressed many valuable uses for a well-developed, solid strategic plan beyond the obvious value of guiding the SSO over the next few years. First, all of our clients tell us that the plan continues to have unexpected value in terms of improved communication within the organization, primarily because the SSO leaders now have one consistent and solid story to tell so that they are able to fan out and reach many more stakeholders. Second, the strategic plan becomes the historical document that highlights the reasons for the actions taken within the SSO. As business leaders change chairs or new leaders join the company, the SSO is able, consistently, to tell its story over time and demonstrate the continued value proposition. This has proven to be extremely useful for companies in acquisition mode that are trying to absorb the shared service work of the newly acquired company efficiently. The strategic plan has also become a critical tool for fighting off competitors for the SSO's work. Competitors come in many guises, and the strategic planning process works to uncover who they are, figure out their real added value and understand how they threaten the SSO.

Balance of Cost and Quality

The challenge of balancing the cost of service with the quality of service is a dilemma that every business operation faces. For the SSO, it is no less challenging. The leading SSOs seem to have taken the management of this dilemma to another level by leveraging their data and management information and then rolling it back into their strategic plan. These leading SSOs have a clear understanding of their cost of service, their price of service and in particular, their customer's usage and buying patterns. By leveraging this information, the SSOs are able to review their service offerings, determine how to adjust or improve their offerings and stop delivering non-profitable services.

This information is also extremely useful in determining technology investment for the future. In fact, this is a critical element of the strategic plan. Product and service cost information, customer usage and buying patterns and technology tools appear to be the key ingredients of effectively and efficiently managing the balance between cost and quality. The key element here is the timeline. When to do what, with whom, and with what technology are key components of a strategic plan.

Expansion Capability

Those SSOs that have been operating for a longer period of time all seem to be struggling with expansion questions. How best to serve the global company after beginning as a domestic SSO is a common question. Sarbanes-Oxley compliance has been well served by SSOs. As the SSOs become experts for the company in compliance and risk management, executives are demanding that they take on more work because they provide comfort.

The questions now being asked of SSOs come in many forms:

  • Why do we have all these independent shared services operations throughout our company?
  • Can we get efficiencies by putting them together?
  • How do we take on or get the work that still remains in the business unit (work the business units were unwilling to give up the first time around but which belongs in a shared services environment)?
  • How do we prepare ourselves to take on work from a newly acquired company, efficiently and effectively, without adding staff?

Few SSOs are currently asking themselves how to sell their services outside the company, but the question lingers. Imbedded in the expansion question is the sourcing question, which is endemic in all elements of a strategic plan. The question regarding expansion is, how can I continue to find more efficient means of sourcing the work so I can expand my service and continue to satisfy my value proposition? We see the expansion question as an increasing concern that comprises a significant part of the strategic plan for most companies.


SSOs have an obligation to all of their constituents to thoroughly plan for the future. In the past few years, we've witnessed a concerted effort by our clients and other SSOs to develop such a strategic framework. We encourage all SSOs, even those that are just in the implementation phase, to step back and take a deliberate approach to taking control of your own destiny. You'll have more success and fun!

About the Authors

Samuel T. Poston
Senior Vice President, Shared Service Practice
ScottMadden, Inc 

Sam Poston is head of the firm's shared services practice and has been a management consultant for more than 20 years. He has worked both as a consultant and a line manager in the utility industry since 1979. He specializes in linking internal shared services delivery systems to corporate strategies and goals.

Karen Hilton
Manager, Shared Service Practice
ScottMadden, Inc 

Karen Hilton has consulted with ScottMadden since 1995 and has focused on process improvement, organizational design and restructuring and cost reduction analysis. Within shared services, she has expertise in human resources and service center design and implementation.